Stock plummeting due to Estée Lauder's revenue prediction adjustment
Esteé Lauder Faces Challenges Amid Industry Adjustments
Esteé Lauder, a prominent name in the luxury goods industry, is currently navigating a series of challenges that are causing a ripple effect throughout the sector. The company, known for its skincare and makeup products, has recently appointed Stéphane de La Faverie as its new CEO.
According to reports, Esteé Lauder is trying to turn things around with a strategic shift. The company is facing a negative impact on profits of around $100 million due to tariffs by 2025/2026, causing uncertainties for the brand. These tariffs are putting pressure on consumer spending, particularly in the skincare and makeup segments, which are the company's core products.
The challenges are not limited to tariffs alone. Weak sales performance has also affected Esteé Lauder's stock (WKN: 897933), with the fourth quarter seeing an organic net sales drop of 13%. In after-hours trading, the company's shares are significantly lower, down around 7%.
In response to these challenges, Esteé Lauder has lowered its full-year guidance for adjusted earnings per share to between $1.90 and $2.10, below analysts' estimates of $2.21. The company is also undertaking extensive restructuring measures, with restructuring expenses for the year 2026 estimated to be between $1.2 billion and $1.6 billion before taxes.
Despite these short-term challenges, the long-term opportunities for Esteé Lauder depend on successful new product introductions and efficiency measures. Investors who followed the recommendation (Issue 27/25) are still in the black, with a current price of 71.20 euros, but a stop-loss for the investment is at 55.00 euros.
The current stock recommendation for Esteé Lauder is a hold, reflecting the need for successful new product introductions and efficiency measures to navigate these challenges. The company's struggles are also affecting the broader luxury goods industry, with rising prices due to tariffs putting pressure on consumer spending.
In conclusion, Esteé Lauder is facing a tough period, but the company's long-term success depends on its ability to navigate these challenges and successfully introduce new products and implement efficiency measures. The appointment of Stéphane de La Faverie as the new CEO is a step towards this direction, and investors will be watching closely to see how the company fares in the coming months.
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